If the supply of saving is not perfectly inelastic in the nation, then which of the following taxes will cause efficiency loss in capital markets?

Question

Quizplus · Accepted Answer

A general wealth tax and a national tax on real estate would discourage saving and investment as it reduces the return on investment, leading to a decrease in the supply of saving. This will result in an efficiency loss in capital markets. On the other hand, a consumption tax does not impact the supply of saving and would not result in an efficiency loss in capital markets.

If the Supply of Saving Is Not Perfectly Inelastic in the Nation